On February 3, the cryptocurrency market experienced a waterfall-like decline, with Bitcoin briefly plunging to $91,000 and Ethereum dropping below $2,100, the lowest level since November. Other Altcoins suffered even more severe losses, with an average decline of over 15%. Just as investors were panicking, capital flowed back during the North American trading session, and the market saw a V-shaped rebound. In the early hours of today, Bitcoin even briefly touched $102,500, fully recovering yesterday's losses.
Before and after the Lunar New Year holiday, Bitcoin has experienced several short-term sharp declines. However, it is worth noting that despite the significant drops, Bitcoin has been able to recover quickly each time, demonstrating remarkable market resilience.
DeepSeek Deals a Blow to the Market
On the eve of the Lunar New Year, the domestic AI large model DeepSeek surpassed ChatGPT to top the US App Store, attracting global attention from the tech, investment, and media industries. As the model is extremely low-cost but can rival the AI products of companies like OpenAI, it has had a significant impact on the global market, shaking the foundation of the "brute force miracle" belief in the AI industry. This has led to a severe sell-off in US tech stocks, with Nvidia's share price dropping nearly 17% at one point.
The cryptocurrency market was also not spared, with BTC and ETH falling 6% and 7% respectively, and some Altcoins suffering double-digit losses. However, after the plunge, the market saw a rapid rebound, with mainstream currencies like BTC and ETH quickly recovering their losses, demonstrating strong bullish market sentiment.
Trump's Tariff Policy Triggers Market Panic
During the Lunar New Year period, Trump's promised tariff policy was gradually implemented. On February 2, US President Trump signed an order to impose a 25% tariff on imports from Mexico and Canada, and a 10% tariff on China. The trade volume between the US and these three countries is around $1.6 trillion, and the relevant countries have vowed to take retaliatory actions, triggering a global financial market shock.
The market is concerned that a full-blown trade war will disrupt the global supply chain, drive up inflation, and lead the Fed to raise interest rates again, weighing on the economy. The cryptocurrency market experienced a waterfall-like decline, with BTC briefly plunging to $91,000 and ETH dropping below $2,100, while many Altcoins hit all-time lows.
After the global financial market turmoil, on Monday, Trump said he had spoken with the leaders of Canada and Mexico and agreed to delay the 25% tariff plan on these two neighboring countries for a month and continue negotiations. This eased market sentiment, and the cryptocurrency market saw a V-shaped rebound, with BTC briefly touching $102,500 and fully recovering yesterday's losses.
Is the Bull Market Still Ongoing?
During this period, Bitcoin has experienced several sharp declines, and while it has been able to recover quickly each time, these fluctuations have been continuously shaking investor confidence and leading to increasingly weak market sentiment, sparking debates about whether the bull market is still ongoing. Overall, this bull market still has the potential to continue, mainly based on the following points:
1. Trade policies may just be negotiation tools. During Trump's first term, his tariff policies have been frequently changing and inconsistent, with tariff threats being more of a negotiating chip than a long-term strategy. After Trump announced tariffs on Mexico and Canada, the tech stocks' decline was limited, indicating that the market believes Trump was "firing a blank" to get the Mexican and Canadian governments to crack down on drug trafficking and illegal immigration into the US. Sure enough, the next day, Trump said on social media that Mexico had agreed to deploy 10,000 soldiers to the border to control illegal immigration and drugs, and Canada would also take corresponding measures, and the tariff policy was temporarily postponed, further supporting this view. It now appears that Trump's plan is progressing smoothly, and the negotiations with Mexico and Canada have already yielded results.
2. Trump's campaign promises are being fulfilled. Trump's crypto-friendly policies are progressing, with some already realized, such as appointing crypto-friendly officials and issuing executive orders. The market is most concerned about the US national Bitcoin reserve strategy, and there has been further news on this.
On Monday, Trump signed an executive order directing the Treasury and Commerce Departments to submit a plan for a new US sovereign wealth fund within 90 days, to be established within the next 12 months. Although Bitcoin was not explicitly mentioned when the order was signed, this fund could become a tool for the government to purchase and hold cryptocurrencies. Cynthia Lummis, who first proposed that the US establish a Bitcoin strategic reserve and was appointed by the Trump administration as chair of the US Senate Banking Digital Assets Subcommittee, posted on X using the Bitcoin symbol, hinting at a connection to the Bitcoin strategic reserve.
3. BTC has not shown clear topping signals. In previous bull markets, Bitcoin has displayed clear topping signals, but the 30 mainstream topping indicators recognized by the market, including the Rainbow chart and the ahr999, have not been triggered yet. Additionally, the tops of all historical bull markets have not been flat, but rather have had a needle-like structure, not giving retail investors much time to think. However, Bitcoin has now stayed around $100,000 for more than a month, which is also a typical sign that the bull market is still ongoing.
In summary, while the market volatility in early 2025 has been intense, multiple signs indicate that the current bull market still has the potential to continue upward. Investors should maintain cautious optimism, closely monitor policy changes and market indicators, and be prepared to respond to potential fluctuations and opportunities.
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